Investing Options for Newbies

Investing used to be a privilege reserved for the Wall Street crowd and the few others who already had enough money and were able to afford hiring a stock broker. The digital revolution of the last 20 years and some changes in laws and regulations have opened this coveted field to people of all walks of life who are interested in creating passive income and increasing their financial net worth beyond a paycheck. Nevertheless, investing is still a very risky undertaking and if not done carefully, it could very well result in a terrible financial situation.

If you have been thinking about getting in on the action but unsure where to start, keep reading – we have compiled a list of a few investment options that are well suited for newbies in the field.

Certificates of Deposit – Play it Safe

CDs (Certificates of Deposit) have been around forever, and to this day remain as one of the safest investment options. Most banks and credit unions offer CDs with various terms and APYs. As a general rule of thumb, the longer the term is, the higher interest rate it offers. Keep in mind that there are penalties for early withdrawals so only choose a term you feel comfortable with not having access to this money. The APYs offered vary widely from one financial institution to the next, so take the time to shop around for the best rates. In our experience, local credit unions offer much better rates than large national banks.

Wealthfront – Get Started With Automated Investing

Wealthfront is where I do all of my taxable investing. I invest in index funds anyway, where fees are very low, but Wealthfront has the added bonus of Tax-Loss Harvesting, which takes advantages of market volatility to help reduce your tax bill, leaving you more money to invest. And right now, you can get $5,000 managed for free!

There are many other robo-advisors to choose from, including Betterment, which has offerings similar to Wealthfront. It doesn’t matter which service you choose, as long as you do something productive with your money!

Robinhood – Commission-Free Stock Trading

Robinhood will make you feel like a real stock broker – with this app you can invest in actual stocks, in addition to cryptocurrencies, ETFs and options, all commission-free. That’s right, Robinhood offers free stock trading! The standard $10 per trade fee charged by most other brokerages is no longer a deterrent to the new investor who may be wanting to buy just a few shares while learning the ropes.

Fundrise – Invest in Real Estate

Fundrise is a platform that allows you to invest in real estate. The company manages a diversified portfolio of real estate properties, and your investment is spread amongst dozens of assets, thus minimizing the investment risk and optimizing your investment returns. The current minimum to invest is $500, and even though this may sound like a significant amount compared to some of the options we discussed earlier, keep in mind that real estate is expensive and without platforms like Fundrise most of us would never have the capital to invest in real estate independently.

Rule of Thumb – Diversify Your Investments

Whatever options you may choose to get started, do not forget the cardinal rule of investing – diversify, diversify, diversify. Split your investment money between several options you feel comfortable with and continue educating yourself on each in order to ensure your long- term success as an investor.